Cuts-only approach at odds with data

When all the brush is cleared, a new Congressional Budget Office report Tuesday shows that government spending flat-lined in the fiscal year that ended Sept. 30 — leading to a modest dip in the deficit, thanks to an estimated $141 billion increase in federal receipts.

It’s a turning point for which Republicans can take some credit. But the data highlights what’s also become the great arithmetic lesson for the GOP: Even if spending were frozen in place, the nation’s debt keeps piling up, absent more structural benefit reforms and tax revenue.

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Indeed as measured by CBO, 2011 was a year that saw spending trends break heavily in favor of deficit hawks. The combined federal outlays for Medicaid, Medicare and Social Security rose by a little more than 3 percent — less than half of what had been the five-year average. Military spending grew by 1.1 percent, and after a 7.2 percent increase in 2010, other government activities fell by a negative 2.2 percent.

Yet even in this climate, the deficit in 2011 ended up well north of $1 trillion for the third year in a row, all underscoring the poor economy but also the need for more change on both sides of the ledger. Addressing this gap was the great hope attached to the House-Senate supercommittee created by the August debt-limit agreement, but two weeks before the Nov. 23 deadline, taxes remain such an ideological stumbling block that it puts the whole enterprise in serious jeopardy.

An exchange on Nov. 2 between Treasury Secretary Timothy Geithner and Senate Minority Leader Mitch McConnell — confirmed by persons in both parties — is telling.

Geithner had come to the Capitol to meet with the Kentucky Republican prior to leaving for the G-20 summit in France, but McConnell steered the conversation back to the deficit-reduction talks and asked if the White House was hoping the supercommittee would fail.

This has been a favorite theory of conservatives, who argue that failure serves President Barack Obama’s short-term interests by giving him another example of a “do-nothing” Congress. And it has especially rankled McConnell, who was pivotal to the August agreement and is invested in the 12-member panel.

Geithner, who also was part of the August debt talks, pushed back, saying no, that Obama wanted a successful outcome and had submitted significant detail in September to help the panel meet its target. McConnell then criticized Democrats for being unrealistic in asking for $1.3 trillion as part of a larger $3 trillion deficit-reduction plan. The secretary answered by walking through the Republican counteroffer and showing that its claim of $640 billion in new government receipts was unrealistic itself, since so little of the total represented real tax revenue.

McConnell was described as silent, and the meeting ended without any counterproposal to find middle ground.